On Tuesday, President Obama will be signing an economic stimulus bill that will provide a tax credit for home buyers on their 2008 or 2009 taxes, in an amount amounting to $8,000 or 10% of the property´s value, depending on whichever is the lesser value. This credit is also refundable, so tax filers will get the full $8,000 even if the total amount of their tax bill (amount of withholding paid during the year, plus anything extra they had to pay when filing returns) is less then that.

To qualify, the property in question must have been purchased between January 1^st to November 30^th, 2009. The buyers also cannot have owned a home in the past three years, as this credit is basically only for first time home buyers. Another stipulation is that the person applying for this tax credit, must live in the property for at least three years or they will have to pay back the credit. Buyers must also make less then $75,000 if they are an individual or under $150,000 for couples. Buyers who make more then these figures may still be able to get a lesser credit. As far as applying goes, the credit only has to be claimed on the tax return. For those who have already finished their returns, they can file amended returns for 2008 in order to claim their credit.

This stimulus plan is better then the $7,500 tax credit which was passed in July, being as it was more of a loan then a credit, but the housing industry still feels that the plan is not as effective as it could have been. They were hoping that Congress would continue with a Senate proposal allowing a $15,000 non-refundable credit for all home buyers, not just first timers. Bernard Markstein, an economist and forecast director with the Nat. Association of Homebuilders agrees with that thought line, saying that "would have done a lot more to turn around the housing market,...We have a lot of reports of people who would be coming off the fence because of it." Of course, Lawrence Yun, a chief economist for the National Association of Realtors, says that the $8,000 will bring around 300,000 new home buyers into the market, and it could create additional buying opportunities later on as he thinks that, "there are many homeowners who would be trading-up but they have had no buyers for their own homes,". Mark Goldman, a real estate lecturer with San Diego State University, did point out that the credit does not address or solve one important dilemma, buyers who do not have or are struggling to obtain a down payment. Credit is not applied until the home is bought, but if the buyers cannot come up with the down payment, no transaction can be made. What can be done to fix this?